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Commentary: After a year of the EPA with Europe: What benefits for the Caribbean?

By Sir Ronald Sanders

The European Commission (EC) will be holding a symposium on April 22 and 23 on the year-old Economic Partnership Agreement (EPA) between the European Union (EU) collectively and 15 Caribbean countries individually.
There is, as yet, no indication that Caribbean governments or the Caribbean Community (CARICOM) Secretariat will be holding a similar exercise.

It has to be assumed that each of the governments that signed the EPA has long established units both to implement its terms and to monitor its effects on individual economies.

Therefore, relevant authorities in each of the Caribbean states as well as the Secretariat of the Caribbean Community (CARICOM) should be able to provide a list of the benefits that have been secured from the EU under the EPA. Our publics had been told that we would benefit not only from the exports of new goods and commodities to the EU but also from the provision of a wide range of services. Additionally, Caribbean companies would have the right of establishment in the EU.

Against this background, it should be fairly easy for the competent authority in each country to provide information related to just a few matters such as: what preparations and actions have been taken by exporters of goods and especially services to access the EU market; what are the investment plans by companies to establish in the EU market; and how easy or difficult are their plans looking for access to Europe.

There is a very important clause in the EPA which allows for a review of it within 5 years of its coming into force. That clause was hard fought for, and came about only because Guyana’s President Bharat Jagdeo had the courage to insist upon it even after other Caribbean governments had agreed to sign the EPA without such a review mechanism.

In defence of several Caribbean heads of government, it should be noted that they were reluctant to sign and many did so only after their crucial exports of bananas and sugar and some manufactured goods (from Trinidad and Tobago for instance) were threatened by the EC with a higher tariff in the EU market.

But, if the EPA is to be properly reviewed – and it should be subject to such a review on an annual basis – it is essential to monitor its implementation and to gather information that will inform an examination

However, informed sources in the region say that some governments have done very little about implementation and others have done nothing at all.

What is known for certain is that even though Caribbean countries and the EU are supposed to be ‘partners’ under the EPA, the EC has denounced the Sugar Protocol causing Caribbean countries to lose their preferential price for sugar; the EC has agreed a new trade regime for bananas with exports from non African, Caribbean and Pacific countries that will decimate what is left of the banana industry in the Caribbean; and come June 20, the EC will renege on an undertaking to the Caribbean rum industry to help finance restructuring and marketing while at the same time reducing tariffs on competing rum from several Latin American countries.

Not surprisingly several Caribbean businesses have lamented the benefits to them of the EPA so far. For example, Ramesh Dookooh, President of the Guyana Manufacturing and Services Association, observes that “Guyana earns much of its revenue on traditional exports, including rice and sugar, both of which are not covered by the EPA’s duty- and quota-free. Thus, the private sector in our country has its reservations about the economic opportunities available under the EPA”. Nonetheless, he is hopeful. He says: “Wider consultation with stakeholders and a stronger focus on the developmental dimension of the agreements could make the EPAs even more effective.”

Unfortunately, there has not been much evidence of consultation. The experience of sugar, rum and bananas indicate that the EC now takes the Caribbean for granted. After all, they do already have a signed full EPA from the region, so why concern themselves overly about the Caribbean.

The EC also controls the purse strings. They have knotted those strings on the purse of the 8th European Development Fund (ED) from which money for restructuring and marketing the rum industry should have come, and its daunting bureaucratic procedures halt many Caribbean countries in their tracks from getting money to implement the EPA under the 10th EDF.

An EU fund, managed by the Caribbean Development Bank (CDB), is reported to be exhausted with no sign of being replenished.

Undoubtedly, the global financial crisis – as well as the failures of regional financial institutions – has battered Caribbean governments. All CARICOM countries have been preoccupied with saving their economies from shocks including worsening terms of trade especially with the EU – even Guyana though it had 3.3 per cent growth in 2009.

But, Caribbean governments cannot afford to let attention to the EPA with the EU slip. The European Commissioner for Trade, Karel De Gucht, recently told German business people: “The economic crisis has temporarily halted the process of globalisation. But let there be no mistake: this process is very likely to pick up again with renewed vigour. The EU must put in place the conditions to benefit from it to the full”. He is looking to a “successful conclusion” of the global negotiations at the World Trade Organisation (WTO) “to boost Europe's GDP by around 45 billion Euros”.

Commissioner De Gucht will measure a “successful conclusion” very differently from the Caribbean, but the region should have its own collective plan of action and its own definition of success on which it should collaborate with like-minded countries.

The implementation of the EPA and the procuring of benefits from it have not been evident so far, and the EC has not been helpful to the Caribbean in the process.

When Caribbean leaders meet their EU counterparts for a Conference on May 17th in Spain, they should be fully briefed and prepared to tell European leaders of their dissatisfaction and propose means of making the EPA deliver on the ‘partnership’ it promised.

Sir Ronald Sanders is a business executive and former Caribbean diplomat who publishes widely on small states in the global community. Reponses to: www.sirronaldsanders.com

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